Some CUBE thoughts:
First, let me say that I feel for the CUBE shareholders, although I think the drop was nowhere near the magnitude expected by many. I lived through ESST drop, which was from far better news than CUBE's warning, sucked it up as part of investing. I don't love my stocks. I totally agree with others that view stocks as a vehicle for making money. Unfortunately, there are many on SI that view certain stocks as their "turf" and any negative comments or serious doubts are "naysayers," "loudmouths," and the like.
CUBE has not been honest with shareholders. <period>
I sold my CUBE position a little over a month ago due to increasing doubts. I repeatedly asked the same question on this thread: Why are the statements from ESST and CUBE completely contradictory? While I think some CUBEies stuck their head in the sand, I also think the lack of a satisfactory answer was because we small shareholders honestly didn't know who was right. I had bet it was Fred Chan because he was far more explicit with respect to supposed channel stuffing (just short of accusing CUBE). Having remembered all the posts from honest CUBE bulls, I firmly believe CUBE shareholders were misled. A rosy picture was given of CUBE recapturing market share in a booming market where manufacturers couldn't get enough chips. Projected market growth does not change 100% in one month's time. Either CUBE was (1) incompetent in not knowing the market during the last conf call or (2) they were hiding it behind inflated chip shipment figures.
At this point, every shareholder should reassess this company. A few people have posted and are, in effect, putting their heads back in the sand.
Is CUBE a leading Digital Video company? Yes. No doubt. They have the tech.
Is CUBE using this tech edge to enhance shareholder value? No. This is clearly shown and directly relates to ability of management.
Will CUBE bounce back up in the short-term? Unlikely. CUBE has only gone down 5 points from this news. Raise your hand if you think the complete dismissal of VCD, a large % of revenue, is worth a mere couple of points? How easily can you go from talk of recapturing market share and market leadership to writing off an entire market?
How will CUBE fare in the long-term? This is the big question. Shareholders can only wonder about competence to capitalize on their tech advantage. VCD was theirs, and they lost it to a relatively small company. How will they stack up against the big boys like SGS-Thompson and Sony? Not to mention the little guys like ESST and Zoran?
I've been forthright of when I'm long or short. I am currently short at 20 1/2. I don't think the shorts have covered. Why should they when very little has happened to stock price despite talk now of losing an entire market? When stories are written with a spin like "well, CUBE had planned on diminishing % of VCD ... its just a lot quicker than expected" <paraphrased>, you have to scratch your head.
-Bill |
